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FORMER ABC EXEC NAMED NEW MARTHA STEWART CO. CHIEF

Plans to Restore Ms. Stewart 'to the Core' of the Business

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NEW YORK (AdAge.com) -- In a surprise move marking the start of the latest era at Martha Stewart Living Omnimedia, Susan Lyne was named president-CEO of the company as Ms. Stewart's
Photo: AP
Susan Lyne, new president and CEO of Martha Stewart Living Omnimedia.
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longtime business partner, Sharon Patrick, resigned those positions.

Ms. Lyne told AdAge.com she was "thrilled and happy" to be able to "help turn around the company." She also said that Ms. Stewart, who is writing a book about her ordeal, would return to the company and be back with a syndicated TV show and other projects after she had completed her prison term.

Strategy shift
Ms. Lyne's comments indicate a major shift away from an earlier strategy of deemphasizing Ms. Stewart and her connection to the media company's current and future products. That plan was put into effect by then-president Ms. Patrick shortly after Ms. Stewart's legal problems reached critical mass.

An executive familiar with the matter said Ms. Patrick's replacement was "elected" by the company's board before Ms. Patrick resigned.

Efforts to reach Ms. Patrick for comment were unsuccessful.

Stunning rebuke
The executive change is a stunning rebuke for Ms. Patrick, who engineered the deal that freed Martha Stewart from a contract with Time Inc. -- and allowed the formation of one of the media world's powerhouses of the late '90s, Martha Stewart Living Omnimedia.

Ms. Patrick was president of the company until the early stages of Ms. Stewart's legal problems related to the sale of ImClone stock. When Ms. Stewart stepped down as CEO, Ms. Patrick assumed that title also.

Ms. Lyne, who was 53 when named a director of MSLO in June, was most recently president of ABC Entertainment. She was ousted from ABC this summer shortly after receiving a public statement of support from Walt Disney Co.'s president and chief operating officer, Bob Iger -- and mere weeks before Desperate Housewives and Lost became major hits for the languishing network.

Convulsed in crisis
The former network executive takes over a company that has been convulsed in crisis and whose flagship magazine, Martha Stewart Living, has suffered devastating advertising and newsstand sales declines. Simultaneously, Ms. Stewart's eventual conviction and prison sentence essentially decimated the company's TV division.

After being convicted in March of lying to federal investigators about her ImClone stock sale in 2001, Ms. Stewart was sentenced to five months in prison followed by five months of home confinement. She began her prison sentence at the Federal Bureau of Corrections' Alderson Prison Camp in Alderson, W.Va., on Oct. 8. She is due for release from prison in March 2005, after which time she starts her five months of home confinement.

Shortly after Ms. Stewart was sentenced, Ms. Patrick announced the company would begin reorganizing itself from one built around a single personality to one that would apply its "proven Omnimedia strategy" around a broader portfolio of brands. To this end, in August MSLO acquired two health-and-wellness publications -- Body and Soul and Dr. Andrew Weil's newsletter -- for $6 million. The appointment of Ms. Lyne leaves an open question as to whether that strategy will continue.

In an interview with AdAge.com this evening, Ms. Lyne declined to say whether the move to minimize the use of the Martha Stewart name with company products was a mistake. "I don't want to comment on what's been done," she said.

Restore 'Martha Stewart' brand
However, she said she intends to return Martha Stewart to the core of the business when Ms. Stewart completes her prison term. "We fully intend to restore the Martha Stewart brand," she said. "I think the Martha Stewart brand and the people are the biggest assets and we'll embrace them."

Ms. Lyne confirmed that Ms. Stewart will return to work for the company when she is released from prison, but added that the law limits Ms. Stewart's involvement to 48 hours a week during the subsequent period of home confinement.

When asked whether Ms. Stewart had anything to do with her appointment to head the company, Ms. Lyne said Ms. Stewart is restricted from doing business from jail, but was informed of the appointment.

Ms. Lyne, who spent the summer between jobs before arriving at the MSLO, said: "It is a nice moment to gear up, given that we're through the tough period and everyone has this pent up creative energy. That's going to be my challenge to get the company back to what it does best."

Syndicated TV show
It appears Ms. Lyne is already working on relaunching the syndicated TV show that she predicted would be back on air with Ms. Stewart at the helm by the 2005-06 season. She declined to comment on whether negotiations were taking place with the show's former syndicator, KingWorld Productions, part of Viacom, or other parties. It appears a number of other new projects are also in the works, including Ms. Stewart's book about her ordeal, though Ms. Lyne said she couldn't talk about them until they are nearer fruition.

Ms. Lyne, who describes herself as a subscriber to Martha Stewart's products, said she felt no bitterness about her ouster from ABC. "I'm rooting for them," she said. Ms. Lyne is credited with having supported the two shows that have brought ABC back from the dead: Desperate Housewives and Lost.

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